Feb

20

grainThe USDA issued the preliminary 2010 crop report, which contained no surprises to the grain trade. The grain markets are holding steady today and are yawning at the report. There is nothing in this report that will affect prices on the upside unless demand increases, country movement slows, or some type of crop disease infects the crop. Anyway, the big grain companies have had their estimates for two weeks and their summaries tend to be more accurate than the USDA's report.

Roberto de Vries asks:

“The big grain companies have had their estimates for two weeks and their summaries tend to be more accurate than the USDA’s report.”

That’s nice to know but what I wonder is what the markets trade upon, the companies' estimates or those from USDA?

Jeff Watson replies:

The grain companies are as secret as the CIA or NSA, and the grain companies will always make a profit. The key to trading the grains is not to look at what the USDA's or grain companies' estimate of the crop is, but whether the grains are cheap or expensive. Since the supply of grain and amount of grain for sale is reasonably well known, half the job is already done for you. The tough part is deciding whether you are right or wrong and staying on the same side of the insurmountable forces of the big grain companies who always seem to be on the right side of the trade. Same thing the Palindrome says. Works the same way in the grains or any other market.

Jeff Watson, surfer, speculator, poker player and art connoisseur, blogs as MasterOfTheUniverse.

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